Equity shares are also known as ordinary shares. They are standard shares with no restrictions and special rights. The owners/shareholders of equity shares essentially own the business as they have the right to vote and manage the company. Equity share can be further divided based on:
- Share capital
- Definition
- Returns
Equity share based on share capital
Here is the classification of equity shares based on share capital
A maximum amount of capital that a company can issue to the shareholders as agreed in its article of association. Authorized share capital is also called authorized stock, authorized share, or authorized share stock.
Issued share capital is the shares sold to and held by a company’s investors. The number of issued shares corresponds to the amount of subscribed share capital, and the amount can’t exceed the authorized amount.
The shares that investors have promised to buy. It is the monetary value for which investors have expressed an interest.
The amount of money paid by the investors to hold the company’s stock.
Equity share based on definition
Here is the classification of equity shares based on the definition
Those additional shares that the company gives to its existing shareholders without any additional cost are based on shares owned by them.
New shares are provided by a company to its existing shareholders at a discounted price within a specific period.
A discount shares issued by a company to its employees and directors at a discounted rate or for a consideration other than cash.
A non-voting share in a company’s capital belongs to a class with no voting rights.
The shares give the stockholders the right to vote on matters of corporate policymaking.
Equity shares based on returns
A dividend shares is a distribution of the company’s earnings to its shareholders in the form of issuing new shares, determined by its board of directors.
Growth shares are the shares given by a company to non-employees. They have a low or nil value until a company reaches a certain target.
Value share appears to trade at a lower price relative to its fundamentals, such as dividends, earnings, and sales.
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